Adobe pursues software and services strategy

Adobe Systems' CEO Bruce Chizen has trouble using the words 'partner' and 'Microsoft' in the same sentence.

In its first full quarter since releasing CS3, Adobe reported US$546 million in revenue from its so-called creative software tools, up 65% year to year. Those sales seem to show that Adobe can afford to wait.

"I wouldn't say there's any pressing business reason to create a fully hosted version of Photoshop or Illustrator, as those are professional tools that customers would prefer to install on their computers," said Jason Bloomberg, an analyst at ZapThink.

Bloomberg said that there are some differences between Adobe's strategy and Microsoft's approach, which includes services such as Office Live Workspace, an online document collaboration service that Microsoft released in beta form Monday. Workspace offers some rudimentary version control and document-viewing features, but otherwise relies 100% on Office to create and edit documents.

"Microsoft's key weakness in that area is that they feel they must control both the server and the client," Bloomberg said. He added that Adobe is remaining more platform-neutral, which makes SaaS offerings such as Photoshop Express or Buzzword "open to all comers. Adobe is leveraging their strengths where Microsoft is weak."

Adobe downplayed talk that its online offerings will cause conflict with other vendors. The company is offering Premiere Express to users of YouTube and Photobucket's photo- and video-sharing site. Loiacono said Adobe will try to strike similar deals for Photoshop Express with online photo developers, such as Kodak or Shutterfly.

"Our forte is to solve workflow problems that people have," he said. "In some cases, you will see us doing partnerships."

And with Buzzword and Share, Chizen said, Adobe is "not trying to compete directly with Microsoft or Google."

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